Amalgamation schemes can attract stamp duty, but a saved remission notification may still grant relief for eligible group transfers.
A court-sanctioned amalgamation scheme that transfers property and liabilities between existing juristic persons is an instrument of conveyance within the Indian Stamp Act, 1899, and is therefore chargeable to stamp duty. The transfer operates by law, but that does not exclude stamp liability because the scheme itself effects vesting and transfer. A pre-Constitution remission notification of 25-12-1937 remains operative unless repealed or superseded, and its reference to the Companies Act, 1913 is read with the corresponding provisions of the Companies Act, 1956. The remission applies to eligible parent-subsidiary or subsidiary-subsidiary transfers, subject to the prescribed certificate requirement.
Issues: (i) Whether an order sanctioning a scheme of amalgamation under section 394 of the Companies Act, 1956 is an instrument/conveyance exigible to stamp duty under the Indian Stamp Act, 1899. (ii) Whether the Notification dated 25-12-1937 remitting stamp duty on transfers between specified company groups applies to the sanctioned amalgamation scheme in Delhi.
Issue (i): Whether an order sanctioning a scheme of amalgamation under section 394 of the Companies Act, 1956 is an instrument/conveyance exigible to stamp duty under the Indian Stamp Act, 1899.
Analysis: The definition of "conveyance" in section 2(10) and of "instrument" in section 2(14) of the Indian Stamp Act, 1899 is inclusive and of wide import. A scheme sanctioned under section 394 is founded on a compromise or arrangement between the companies, is given effect through the court's order, and results in transfer and vesting of property and liabilities from the transferor-company to the transferee-company. Such transfer is by operation of law, but that does not exclude stamp liability. The transfer is also between juristic persons in existence at the time of the transfer and is therefore inter vivos for the purpose of the Stamp Act. An approved amalgamation scheme, being an instrument transferring property, falls within the charging provision.
Conclusion: The approved scheme of amalgamation is exigible to stamp duty under the Indian Stamp Act, 1899.
Issue (ii): Whether the Notification dated 25-12-1937 remitting stamp duty on transfers between specified company groups applies to the sanctioned amalgamation scheme in Delhi.
Analysis: The 1937 notification is a pre-Constitution law saved by article 372 of the Constitution of India and was not shown to have been repealed or superseded. The reference in the notification to the Companies Act, 1913 does not defeat its application, because section 649 of the Companies Act, 1956 requires references to former enactments to be read as references to the corresponding enactment in the 1956 Act. The notification applies where the transfer is between a parent and subsidiary company or between subsidiary companies of a common parent, subject to the prescribed certificate. The objection based on Delhi's legislative framework does not displace the Central Government's competence in the field for this purpose.
Conclusion: The notification applies and remains binding, subject to compliance with its certificate requirement.
Final Conclusion: The transfer under the sanctioned amalgamation is otherwise chargeable to stamp duty, but the 1937 remission notification operates for eligible transfers, so the applicant is entitled to relief to that extent subject to fulfilment of the stated condition.
Ratio Decidendi: A court-sanctioned amalgamation scheme that transfers property and liabilities between existing juristic persons is an instrument of conveyance under the Indian Stamp Act, and a saved pre-Constitution remission notification continues to apply unless validly repealed or displaced.
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